Tag Archives: Damages

Federal Circuit: eBay creates a four-element test (not “four-factors”)

Nichia Corp v. Everlight Americas (Fed. Cir. 2017)

Nichia is the world’s largest supplier of LEDs.   The defendant here also sells LEDs and was accused of infringing three Nichia patents. U.S. Patent Nos. 8,530,250, 7,432,589, and 7,462,870.

In a bench trial, the district court judge sided with the patentee – finding that it had proven infringement and the defendant had not proven the asserted claims invalid.  However, the district court refused to issue a permanent injunction – finding that the patentee had failed to show that it suffered irreparable harm due to the infringement or that the remedies available “at law” were inadequate.   On appeal, the Federal Circuit has affirmed — holding that the proof of irreparable harm is a necessary threshold test for permanent injunctive relief, regardless of whether the patentee is left with an adequate remedy at law.  The decision is important (and quite problematic) because it allows for the possibility of no remedy for the patentee.

The baseline comes from the Supreme Court’s decision in eBay v. Mercexchange that established a four-factor test for determining whether to grant permanant injunctive relief.  The patentee must prove: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.

Prior to this decision, my conception of the four-factors were that the balance of the four must weigh in favor of injunctive relief and that the patentee must prove either (1) irreparable harm or (2) lack of remedy at law.  The decision here rejects both of my prior-conceptions.  Taking them in reverse order, the court holds that irreparable harm must be proven before relief can be granted.  In addition, the court wrote (likely dicta) that each factor must be individually proven for injunctive relief to issue.

The movant must prove that it meets all four equitable factors. i4i Ltd. P’ship v. Microsoft Corp., 598 F.3d 831, 861 (Fed. Cir. 2010). And it must do so on the merits of its particular case. eBay. . . . Because Nichia failed to establish one of the four equitable factors, the court did not abuse its discretion in denying Nichia’s request for an injunction.

The court here appears to shift this from a four-factor test to a four-element test.  The result of this decision is that it becomes incrementally even more difficult for a patentee to obtain injunctive relief even after winning its infringement lawsuit and defending against validity challenges.   I also expect that any analysis of the historical equitable factors (the approach suggested by eBay) will recognize that this holding is incorrect.

Licensee Marking Requirement

PezPatentRembrandt Wireless v. Samsung (Fed. Cir. 2017)

A jury found for Rembrandt and awarded $15.7 million in damages. On appeal, the Federal Circuit has affirmed on infringement and validity – but rejected the lower court’s finding that the patent had been properly marked.

Back-damages for patent infringement is a bit interesting. The marking statute creates a constructive notice regime for sales of ‘patented articles’ and then cuts-off damages for failure to mark those articles: 

In the event of failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice. Filing of an action for infringement shall constitute such notice.

35 U.S.C. § 287.  The marking requirement does not apply only to patentees, but also to “any persons” making or selling the invention “for or under” the patentee.  The courts have interpreted this requirement then as applying to a patent licensee — “thereby limiting the patentee’s damage recovery when the patented article is not marked” by the licensee.  Quoting Amsted Indus. Inc. v. Buckeye Steel Castings Co., 24 F.3d 178, 185 (Fed. Cir. 1994).

Here, Rembrandt had previously licensed the patent at-issue (U.S. Patent No. 8,023,580) to Zhone Tech who sold unmarked products allegedly embodying claim 40 of the patent.  (Zhone was not required to mark under the license agreement).

As soon as Samsung sought to limit its potential damages to the date of actual-notice, Rembrandt dropped its allegations that Samsung infringed claim 40 and also filed a statutory disclaimer with the USPTO disclaiming claim 40.  Samsung was later found to infringe other remaining claims of the patent – and the district court ruled that the disclaimer was sufficient to cure the marking problem.

On appeal, the Federal Circuit disagrees:

Rembrandt’s position, adopted by the district court, effectively provides an end-run around the marking statute and is irreconcilable with the statute’s purpose. Allowing Rembrandt to use disclaimer to avoid the consequence of its failure to mark undermines the marking statute’s public notice function. . . .

The marking statute protects the public’s ability to exploit an unmarked product’s features without liability for damages until a patentee provides either constructive notice through marking or actual notice.


Disclaiming a patent claim does not later erase the fact that the claim was previously in effect and had not been properly marked.

The Court suggested a potential question of whether the focus should be claim-by-claim rather than patent-by-patent, but declined to rule on that issue because it had not been properly raised on appeal.   On remand, the district court will be asked to look into that question and – if needed – recalculated the damage award.

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The case here offers an important distinction – in my mind – between a patent license and a covenant-not-to-sue. Any reasonable license that covers an ‘article’ would include the marking requirement.   In my mind (although perhaps not the court’s) a mere covenant-not-to-sue should not fall under the marking requirement.

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Typical Marking License Language: Licensee mark all Licensed Products made or sold in the United States with an appropriate patent marking. All Licensed Products shipped to or sold in other countries must be marked in such a manner as to provide notice to potential infringers pursuant to the patent laws and practice of the country of manufacture or sale.  Licensor shall have the right to inspect Licensee’s Licensed Products to determine if Licensee is marking in accordance with this paragraph.


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Unwired Planet v. Huawei: An English Perspective on FRAND Royalties

FRONDGuest Post by Professor Jorge L. Contreras

In the latest decision by the UK High Court of Justice (Patents) in Unwired Planet v. Huawei ([2017] EWHC 711 (Pat), 5 Apr. 2017], Mister Justice Colin Birss has issued a detailed and illuminating opinion regarding the assessment of royalties on standards-essential patents (SEPs) that are subject to FRAND (fair, reasonable and non-discriminatory) licensing commitments.  Among the important and potentially controversial rulings in the case are:

  1. Single Royalty: there is but a single FRAND royalty rate applicable to any given set of SEPs and circumstances,
  2. Significance of Overstep: neither a breach of contract nor a competition claim for abuse of dominance will succeed unless a SEP holder’s offer is significantly above the true FRAND rate,
  3. Global License: FRAND licenses for global market players are necessarily global licenses and should not be limited to a single jurisdiction, and
  4. Soft-Edge: the “non-discrimination” (ND) prong of the FRAND commitment does not imply a “hard-edged” test in which a licensee may challenge the FRAND license that it has been granted on the basis that another similarly situated licensee has been granted a lower rate, so long as the difference does not distort competition between the two licensees.


This case began in 2014 when Unwired Planet, a U.S.-based patent assertion entity, sued Google, Samsung and Huawei for infringement under six UK patents (corresponding actions were filed in Germany).  Unwired Planet claimed that five of the asserted patents, which it acquired from Ericsson in 2013 as part of a portfolio comprising approximately 2000 patents, were essential to the 2G, 3G and 4G wireless telecommunications standards developed under the auspices of the European Telecommunications Standards Institute (ETSI).  Because Ericsson participated in development of the standards at ETSI, any patents shown to be SEPs would necessarily be encumbered by Ericsson’s FRAND commitment to ETSI.

The UK proceedings involved numerous stages, including five scheduled “technical trials” which would determine whether each of the asserted patents was valid, infringed and essential to the ETSI standards.  During these proceedings Google and Samsung settled with Unwired Planet and Ericsson (which receives a portion of the licensing and settlement revenue earned by Unwired Planet from the patents), leaving Huawei as the sole UK defendant.  By April 2016 three of the technical trials had been completed, resulting in findings that two of the asserted patents were invalid and that two were both valid and essential to the standards.  These findings are currently under appeal. The parties then agreed to suspend further technical trials.  In October 2016 a “non-technical” trial began regarding issues of competition law, FRAND, injunction and damages.  Hearings were concluded in December 2016, and the court’s opinion and judgment were issued on April 5, 2017.

A. The High Court’s Decision – Overview

The principal questions before the court were (1) the level of the FRAND royalty for Unwired Planet’s SEPs, (2) whether Unwired Planet abused a dominant position in violation of Section 102 of the Treaty for the Formation of the European Union (TFEU) by failing to adhere to the procedural requirements for FRAND negotiations outlined by the European Court of Justice (CJEU) in Huawei v. ZTE (2014), and (3) whether an injunction should issue in the case.  In the below discussion, Paragraph numbers (¶) correspond to the numbered paragraphs in the High Court’s April 2017 opinion.

B. FRAND Commitments – General Observations

Justice Birss begins his opinion with some general observations and background about the standard-setting process and FRAND commitments.  A few notable points emerge from this discussion. (more…)

Modified Opinion: Federal Circuit Won’t Enjoin Non-Party

Asetek Danmark v. CMI USA (“Cooler Master”) (Fed. Cir. 2017)

The Federal Circuit has updated its original decision in Asetek, with Judge Prost deleting her dissent and her points being incorporated into the majority opinion.  The change here relates to the injunction pending remand.

Asetek sued CMI/Cooler-Master for infringing its computer fan patents. U.S. Patent Nos. 8,240,362 and 8,245,764 (“cooling systems”).  A jury sided with Asetek and the patentee was awarded damages as well as an injunction against specific Cooler Master products.  The problem – is that the injunction was awarded against CMI USA as well as “Cooler Master Co., Ltd.”, a Taiwanese company who was no longer a party to the lawsuit.   On appeal, the Federal Circuit substantially affirmed but remanded on the injunction since it applied to a non-party and went beyond that non-party’s ‘abetting a new violation’ by the adjudged infringer.

The oddity of the original Judge Taranto opinion was that it did not actually vacate the injunction but kept it in-force until modified by the lower court. “We do not think it appropriate to vacate the injunction at present.”  Writing in dissent, Chief Judge Prost argued that “The correct course of action would be to vacate the portions of the injunction that improperly reach Cooler Master.”

Following the original opinion, CMI filed for rehearing and that has been partially granted today with a new opinion from the original panel.  The new opinion here adopts Chief Judge Prost’s position and her partial dissent is deleted as is the panel’s non-vacatur.  The new opinion now partially vacates the injunction so that it no longer applies to the non-party (except for aiding and abetting).  The new paragraph:

Two final, related points. First, the need for further proceedings to determine the proper reach of the injunction in this case leads us to vacate the injunction, effective upon issuance of our mandate, insofar as the injunction reaches conduct by Cooler Master that does not abet new violations by CMI. The district court is to conduct those proceedings in as reasonably prompt a fashion as possible. Our partial vacatur of the injunction does not foreclose Asetek from pursuing reinstatement of the vacated portion of the injunction should there be unjustifiable delay by Cooler Master in completing the proceedings, or from pursuing any other remedies against Cooler Master, if otherwise authorized by law.

The en banc court simultaneously released its denial of rehearing after noting that the panel had revised its opinion.  CMI’s en banc petition began as follows:

The Panel Majority’s precedential opinion has promulgated a new rule that a pre-liability permanent injunction against a non-party is permissible pending a determination of liability under the “legally identified with” theory. There are three issues with this opinion. First, it violates the rule that everyone has a right to his day in court. Second, it violates the rule that actual success on the merits must precede entry of a permanent injunction. Third, its remand of further proceedings to determine the “legal identity” issue is an impermissible advisory opinion.

I believe that the revised decision here is legally correct, but it always gives me pause to watch companies and owners divide-up the structure of their firms without substantially dividing management and control — and then use that division to partially avoid legal liability.  The end result is that the potential corporate complexity can substantially raise the costs of enforcement without providing any social benefit.  In this case, Asetek writes that “the precise historical and corporate relationship between CMI and Cooler Master is murky; not even their counsel is sure of it.”  The parties always had the same attorneys, and CMI distributes all of Cooler Master’s products in the US, and assists with US marketing.



Doctrine of Laches Cannot Bar Legal Damages Claims in Patent Cases

SCA Hygiene Prods. V. First Quality Baby Prods. (Supreme Court. 2017)

In a 7-1 decision delivered by Justice Alito, the Supreme Court has expanded its recent copyright decision in Petrella to now hold that laches cannot be invoked as a defense in patent cases to prevent legal damages within the statutory 6-year limitations period of 35 U.S.C. § 286.

The basic idea is that Laches is a judge-made remedy created by the court of equity in the absence of any statute of limitations.  However, when Congress acts to create a statute of limitations – as it did with §286 – the judge-made law no longer has a role to play.

Again playing on a decade-long-theme of no-patent-exceptionalism, the court wrote:

Indeed, it would be exceedingly unusual, if not unprecedented, if Congress chose to include in the Patent Act both a statute of limitations for damages and a laches provision applicable to a damages claim. Neither the Federal Circuit, nor First Quality, nor any of First Quality’s amici has identified a single federal statute that provides such dual protection against untimely claims.


Justice Breyer dissented – arguing that “for more than a century courts with virtual unanimity have applied laches in patent damages cases” in order to fill an important gap in the statutory regime.



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Supreme Court to Review (and likely Reject) Laches as a Defense in Patent Infringement Cases

SCA Hygiene Laches Oral Arguments: How Do we Interpret Congressional Silence?

Court Maintains Laches Defense for Back Damages in Patent Cases



Mentor Graphics v. Synopsys: Covering All the Bases

Mentor Graphics v. Eve-USA (Synopsys) (Fed. Cir. 2017) [synopsysmentor]

The appeal here is somewhat complicated – as reflected by the Federal Circuit’s 42-page opinion.  The complications begin with the founding of EVE, and emulation software company founded by folks who invented emulation software at Mentor. Synopsys then acquired EVE.   EVE had previously licensed some of Mentor’s patents, but Mentor claims the license was terminated by the Synopsys acquisition.

Ending Assignor Estoppel: The jury found that Synopsys infringed Mentor’s U.S. Patent No. 6,240,376 and awarded $36 million in lost profits damages.  The district court had refused to allow Synopsys to challenge the patent’s validity based upon the doctrine of assignor estoppel.  The judge-made doctrine prohibits a patent’s seller/assignor (such as an inventor who assigned rights to his employer) from later challenging the validity of a patent in patent infringement litigation.   Here, Synopsys agreed that the doctrine applied since the inventors of the ‘376 patent had founded and continued to operate EVE that was the source of the infringement.   However, the adjudged infringer boldly asked the Federal Circuit to eliminate the doctrine (as the PTAB has done) since Supreme Court “demolished the doctrinal underpinnings of assignor estoppel in the decision that abolished the comparable licensee estoppel in Lear, Inc. v. Adkins, 395 U.S. 653 (1969).” On appeal, the Federal Circuit panel disagreed – as it must – following its own precedent such as Diamond Sci. Co. v. Ambico, Inc., 848 F.2d 1220, 1222–26 (Fed. Cir. 1988) and MAG Aerospace Indus., Inc. v. B/E Aerospace, Inc., 816 F.3d 1374, 1380–81 (Fed. Cir. 2016).  The setup here is proper for en banc or Supreme Court petition.  On Point is Mark A. Lemley, Rethinking Assignor Estoppel, 54 Hous. L. Rev. 513 (2016) (arguing that the doctrine “interferes with both the invalidation of bad patents and the goal of employee mobility”).

Indefinite: The district court held on summary judgment that Synopsis’ cross-asserted U.S. Patent No. 6,132,109 is indefinite. On appeal, the Federal Circuit reversed.  The asserted claims require a “circuit analysis visually near the
HDL source specification that generated the circuit.”  And, the district court found that the undefined term-of-degree “near” rendered the claim indefinite.

Patent law requires that the claims “inform, with reasonable certainty, those
skilled in the art about the scope of the invention.” Nautilus, Inc. v. Biosig Instruments, Inc., 134 S. Ct. 2120 (2014).  Terms of degree are certainly permissible, but the patent document must include “some standard” used to measure the term of degree.

Here, the court walked through terms of degree that have been accepted post Nautilus: “spaced relationship”,  “visually negligible”, and “look and feel” based upon the intrinsic evidence or established meaning in the art.

Here, the specification indicates that the nearness of the circuit analysis display is to allow “a designer to make more effective use of logic synthesis and reduce the complexity of the circuit debugging process.”  In addition, the specification provides several diagrams showing the analysis next to the appropriate line of code (below). These descriptions provided enough of a standard for the court to find a reasonable certainty as to the scope of the term and the claim as a whole. “[W]e hold a skilled artisan would understand “near” requires the HDL code and its corresponding circuit analysis to be displayed in a manner that physically associates the two.”  On remand, Synopsys will get a shot at proving infringement of this patent.


Eligibility: A separate Synopsys patent was found ineligible. U.S. Patent No. 7,069,526 (asserted claims 19, 24, 28, 30, and 33). The claims are directed to “A machine-readable medium containing instructions …”  The problem is that the patent expressly defines “machine-readable medium” to include “carrier waves” and therefore is invalid under In re Nuijten, 500 F.3d 1346 (Fed. Cir. 2007).  In Nuijten, the court held that transitory signals are not eligible for patenting because they do not fit any of the statutory classes of “process, machine, manufacture, or composition of matter.” The here court writes: “Because the challenged ’526 claims are expressly defined by the specification to cover carrier waves, they are similar to the ineligible Nuijten claims.”

Claim Preclusion: Finally, the Mentor has successfully appealed the district court claim preclusion holding as to Mentor’s U.S. Patent Nos. 6,009,531 and 5,649,176.  Back in 2006, Mentor had sued EVE for infringing the patents.  That litigation settled with Eve’s license and a dismissal with prejudice.

Here, the Federal Circuit held that claim preclusion cannot apply because the current litigation is based upon acts that occurred subsequent to the prior settlement.

Mentor’s infringement allegations are based on alleged acts of infringement that occurred after the Mentor/EVE license terminated and were not part of the previous lawsuit. Claim preclusion does not bar these allegations because Mentor could not have previously brought them.

What is a bit unclear here is how the license plays in.  The court noted that the current infringement claims are “based on post-license [termination] conduct, so the alleged infringement did not exist during the previous action.”  It is unclear how the court would deal with pre-termination conduct.

Note: The case also includes an important holdings on lost profits damages, willfulness, and written description that we’ll save for a later post.

The Imminent Outpouring from the Eastern District of Texas

The following guest post by Professor Paul Janicke ties-in with his new article published at: Paul M. Janicke, The Imminent Outpouring from the Eastern District of Texas, 2017 Patently-O Patent Law Journal 1. – DC

by Paul M. Janicke

When the Supreme Court reverses the Federal Circuit’s venue ruling in the TC Heartland case, a reversal widely expected, it will return patent venue to the time prior to 1988, when the residence of a corporation for patent venue purpose was limited to (i) a district within the state of incorporation, or (ii) a district where the corporation has a regular and established place of business and has allegedly committed an act of infringement. Presently pending in the Eastern District of Texas are 1,000+ patent cases. The number may go up or down a little before the Court’s ruling, but it’s not likely to change much in that short time.[1] My inquiry is: What will happen to those cases?  My analysis on this subject can be found at Paul M. Janicke, The Imminent Outpouring from the Eastern District of Texas, 2017 Patently-O Patent Law Journal 1..

The new venue statute upon which the Court will base its ruling became effective in January 2012. That means it applies to nearly all the cases now on the Eastern District’s docket, and the venue for hundreds of those cases was likely improper. Those defendants who are not Texas corporations and who lacked any regular and established place of business in Eastern Texas when suit was filed will be entitled to dismissal or transfer to a district that would have been proper under the new law, unless they have waived the improper venue defense. Let’s take a look at the groups of possibly affected defendants.

Local Merchants

Some defendants are local merchants in the Eastern District, accused of infringement only because they sell products made by others. Venue as to these merchants will be proper under either the old or new venue rules, so they are entitled to neither dismissal nor transfer. If the case against a merchant’s vendor is transferred, the merchant’s best bet is to seek a stay of the case against it. While stays are not particularly favored in the Eastern District, a situation like the present one has not likely been encountered before. It may work.

Active Players As Defendants

These are typically manufacturers of high-tech products or vendors of software. Computer-related technology is said to be the subject of over 90% of patent case filings in the district. Most of them lack any regular place of business in Eastern Texas, although we have found some 70 companies who employ 100 or more persons in the district and are defendants in pending patent cases there. Most of these businesses are in Plano, with a few in Beaumont. They too will have to stay put. It isn’t required that the place of business be related to the accused infringing activity.

The Many Other Defendants, And the Problem of Waiver

Those companies lacking a regular business location in the Eastern District will, for the most part, want to exit that district. Some may choose to stay there in order to effect a quick settlement or to show support for their beleaguered customers who have been sued in the district, but I estimate at least 800 will consider seeking a transfer. These break down into two roughly equal groups, those who have waived improper venue and those who have not. Waiver of this defense most typically occurs by failure to plead it in the answer or in an early motion under Rule 12. A sampling of pleadings in pending Eastern District patent cases reveals that in roughly 400 cases the main defendant did not plead improper venue or make a Rule 12 motion. (Note that this is a different subject from inconvenient venue, which is handled under a different statutory section and was sometimes pleaded in the answers.) It is understandable why the improper venue pleading was missing in so many cases: No one knew or even suspected until very recently that the venue rules had been changed by Congress in 2011, effective for all cases filed after January 2012. Good ethical lawyers know they shouldn’t plead a matter for which they have no legal or factual basis, and so they didn’t, and therein lies the waiver. Unfortunately, they cannot undo it by arguing “change in the law.” The change occurred in 2012.

The other group of defendants may have been insightful, but more likely were just following a form-book shotgun answer, and so they did plead improper venue in their answers. Answering this way is usually enough to preserve this defense, but not always. It has been held that taking discovery does not trigger a waiver, nor does proceeding to trial. It is thought that the corporate defendant who has pleaded the defense unsuccessfully has been forced to remain in the improper forum, so these litigation activities are not held against it. However, some courts have held that moving for summary judgment (unsuccessfully of course) is a different matter and does cause a waiver. You are not obliged to seek summary judgment, and you are invoking the court’s power. So some in the second group may find they too have waived.

For Those Exiting, Where Will They Be Sent?

This leaves about 400 non-waived cases. The case law on improper venue cases shows a distinct judicial preference for transfers rather than dismissals. To what districts will these non-waived defendants be transferred? Whatever districts are chosen, we should bear in mind that some of the NPE plaintiffs may not wish to follow, due to the expense involved, so those cases may effectively end. For more serious plaintiffs, we do not know where the cases will go. It depends on subjective factors applicable to each case, but here are some possible options: (1) Choose a district that one or both parties ask for. (2) Select a proper district that has a number of patent pilot judges, the three largest being Northern Illinois, Southern New York, and Central California. (3)  Use history as a guide: In 1997, one year before the large influx to Eastern Texas began, the busiest patent districts were Northern California (172 filings), Central California (162 filings), and Northern Illinois (116 filings). In that year the number of patent cases filed in the Eastern District of Texas was: 10. We shall soon see.

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Professor of Law, University of Houston Law Center

[1] The case is set for argument March 27, with a decision very likely before the end of the Court’s term in June.

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Read the ArticleJanicke.2017.Venue

Prior Patently-O Patent L.J. Articles:

  • Mark A. Lemley, Erik Oliver, Kent Richardson, James Yoon, & Michael Costa, Patent Purchases and Litigation Outcomes, 2016 Patently-O Patent Law Journal 15 (Lemley.2016.PatentMarket)
  • Bernard Chao and Amy Mapes, An Early Look at Mayo’s Impact on Personalized Medicine, 2016 Patently-O Patent Law Journal 10 (Chao.2016.PersonalizedMedicine)
  • James E. Daily, An Empirical Analysis of Some Proponents and Opponents of Patent Reform, 2016 Patently-O Patent Law Journal 1. (Daily.2016.Professors)
  • Tristan Gray–Le Coz and Charles Duan, Apply It to the USPTO: Review of the Implementation of Alice v. CLS Bank in Patent Examination, 2014 Patently-O Patent Law Journal 1. (GrayLeCozDuan)
  • Robert L. Stoll, Maintaining Post-Grant Review Estoppel in the America Invents Act: A Call for Legislative Restraint, 2012 Patently-O Patent Law Journal 1 (Stoll.2012.estoppel.pdf)
  • Paul Morgan, The Ambiguity in Section 102(a)(1) of the Leahy-Smith America Invents Act, 2011 Patently-O Patent Law Journal 29.  (Morgan.2011.AIAAmbiguities)
  • Joshua D. Sarnoff, Derivation and Prior Art Problems with the New Patent Act, 2011 Patently-O Patent Law Journal 12 (sarnoff.2011.derivation.pdf)
  • Bernard Chao, Not So Confidential: A Call for Restraint in Sealing Court Records, 2011 Patently-O Patent Patent Law Journal 6 (chao.sealedrecords.pdf)
  • Benjamin Levi and Rodney R. Sweetland, The Federal Trade Commission’s (FTC) Recommendations to the International Trade Commission (ITC):  Unsound, Unmeasured, and Unauthoritative, 2011 Patently-O Patent Law Journal 1 (levi.ftcunsound.pdf)
  • Kevin Emerson Collins, An Initial Comment on King Pharmaceuticals: The Printed Matter Doctrine as a Structural Doctrine and Its Implications for Prometheus Laboratories, 2010 Patently-O Patent Law Journal 111 (Collins.KingPharma.pdf)
  • Robert A. Matthews, Jr., When Multiple Plaintiffs/Relators Sue for the Same Act of Patent False Marking, 2010 Patently-O Patent Law Journal 95 (matthews.falsemarking.pdf)
  • Kristen Osenga, The Patent Office’s Fast Track Will Not Take Us in the Right Direction, 2010 Patently-O Patent L.J. 89 (Osenga.pdf)
  • Peter S. Menell,  The International Trade Commission’s Section 337 Authority, 2010 Patently-O Patent L.J. 79
  • Donald S. Chisum, Written Description of the Invention: Ariad (2010) and the Overlooked Invention Priority Principle, 2010 Patently‐O Patent L.J. 72
  • Kevin Collins, An Initial Comment on Ariad: Written Description and the Baseline of Patent Protection for After-Arising Technology, 2010 Patently-O Patent L.J. 24
  • Etan Chatlynne, Investigating Patent Law’s Presumption of Validity—An Empirical Analysis, 2010 Patently-O Patent L.J. 37
  • Michael Kasdan and Joseph Casino, Federal Courts Closely Scrutinizing and Slashing Patent Damage Awards, 2010 Patently-O Patent L.J. 24 (Kasdan.Casino.Damages)
  • Dennis Crouch, Broadening Federal Circuit Jurisprudence: Moving Beyond Federal Circuit Patent Cases, 2010 Patently-O Patent L.J. 19 (2010)
  • Edward Reines and Nathan Greenblatt, Interlocutory Appeals of Claim Construction in the Patent Reform Act of 2009, Part II, 2010 Patently‐O Patent L.J. 7  (2010) (Reines.2010)
  • Gregory P. Landis & Loria B. Yeadon, Selecting the Next Nominee for the Federal Circuit: Patently Obvious to Consider Diversity, 2010 Patently-O Patent L.J. 1 (2010) (Nominee Diversity)
  • Paul Cole, Patentability of Computer Software As Such, 2008 Patently-O Patent L.J. 1. (Cole.pdf)
  • John F. Duffy, The Death of Google’s Patents, 2008 Patently O-Pat. L.J. ___ (googlepatents101.pdf)
  • Mark R. Patterson, Reestablishing the Doctrine of Patent Exhaustion, 2007 Patently-O Patent L.J. 38
  • Arti K. Rai, The GSK Case: An Administrative Perspective, 2007 Patently-O Patent L.J. 36
  • Joshua D. Sarnoff, BIO v. DC and the New Need to Eliminate Federal Patent Law Preemption of State and Local Price and Product Regulation, 2007 Patently-O Patent L.J. 30 (Download Sarnoff.BIO.pdf)
  • John F. Duffy, Are Administrative Patent Judges Unconstitutional?, 2007 Patently-O Patent L.J. 21. (Duffy.BPAI.pdf)
  • Joseph Casino and Michael Kasdan, In re Seagate Technology: Willfulness and Waiver, a Summary and a Proposal, 2007 Patently-O Patent L.J. 1 (Casino-Seagate)

Prior Settlement Agreement Helps the Jury find Liability and Damages

by Dennis Crouch

Prism Tech v. Sprint Spectrum (Fed. Cir. 2017) [prismtech]

The Nebraska jury found Sprint liable for infringing Prism’s patents and awarded $30 million in reasonable-royalty damages. U.S. Patent Nos. 8,127,345 and 8,387,155. [verdict]prismverdict

AT&T was also sued under the patents but ended up settling the case for [REDACTED LARGE SUM OF MONEY].  On appeal, Sprint argued (unsuccessfully) that the settlement should not have been shown to the jury under Federal Rule of Evidence 403.

FRE 403 permits exclusion of “relevant evidence” when its “probative value is substantially outweighed by a danger of one … unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence.”

Prior settlement agreements are obviously probative since they help to establish value of the patented technology in the industry.   Traditionally, the settlement value is modeled as less than the value of the patent once its validity and infringement are established.  However, the mixture of risk aversion and litigation costs lead to some settlements that appear greater than the expected value of patent rights.

Here, the Federal Circuit found found “adequate basis for admitting the AT&T Settlement Agreement.” The agreement covered the same patents and – at trial – Prism’s expert explained differences between usage of AT&T and Sprint to help the jury use the prior agreement as comparable.

That Agreement covered the patents at issue here, though not only the patents at issue here. In that common situation, evidence was needed that reasonably addressed what bearing the amounts in that Agreement had on the value of the particular patents at issue here.

For me, the larger potential issue is that the jury is more likely to find the patent valid and infringed if it know that AT&T already paid a [REDACTED LARGE SUM OF MONEY] to settle the case.  This would suggest at least a bifurcated trial.  However, Sprint did not appear to make that argument on appeal.

= = = =

A very interesting argument raised by Sprint on appeal was based upon Rude v. Wescott, 130 U.S. 152 (1889).  In particular, Sprint argued that prior licenses can be used to prove an “established royalty” but not to prove a “reasonable royalty.”  Of course, a single license would not be sufficient to prove the established royalty. See also Cornely v. Marckwald, 131 U.S. 159 (1889).


The Court held in Rude that there was insufficient evidence to prove what has been called an “established royalty” as a measure of damages at law for patent infringement—i.e., “such a number of sales by a patentee of licenses to make, use and sell his patents, as to establish a regular price for a license.”  On appeal, the Federal Circuit rejected the argument as too-old: “The Court in Rude used both the language of patent damages law and the language of evidence law, and both have changed significantly since Rude.”  In addition, the court likely cut-short certiorari on the issue by finding that Sprint had failed to properly preserve the arguments for appeal.

Affirming Arbitration Award

Bayer Cropscience v. Dow Agrosciences (Fed. Cir. 2017) (non-precedential).

The case here involves a set of genetically modified crops containing the pat gene, which confers resistance to the herbicide glufosinate.  Some of the crops include additional genetically modified resistance n a “molecular stack” with additional herbicide resistant genes such as aad-12 ( 2,4-D herbicide tolerance) and dmmg.

The parties here have a long history of licenses and cross-licenses. However, after an accusation of IP theft,  in 2012 Bayer sued Dow for infringing its U.S. Patent Nos. 5,561,236, 5,646,024, 5,648,477, 7,112,665, and RE44,962.  In response, Dow filed a set of for inter partes reexam requests (still pending)

That litigation was dismissed because of an arbitration agreement – that resulted in a $455 million arbitration award for Bayer for lost profits and reasonable royalty and also an arbitration judgment that the patents were not invalid.

In a non-precedential opinion, the Federal Circuit has affirmed the district court’s confirmation of the arbitration award with the minor exception of interest calculation.  Here, the arbitrator awards are powerful becaues they can only be overturned based upon quite “demanding standards” involving “manifestly disregard the law.”  A portion of the award included what appears to be post-expiration royalties. However, the Federal Circuit held that the manifest-disregard standard is so high that even those damages cannot be vacated (one of the five patents has not yet expired).

= = = =

This case is actually the first time that I have seen the arbitration award submitted to the USPTO as required by 35 U.S.C. § 294(d).

(a) A contract involving a patent or any right under a patent may contain a provision requiring arbitration of any dispute relating to patent validity or infringement arising under the contract. . . .

(d) When an award is made by an arbitrator, the patentee, his assignee or licensee shall give notice thereof in writing to the Director. . . . The Director shall, upon receipt of either notice, enter the same in the record of the prosecution of such patent. If the required notice is not filed with the Director, any party to the proceeding may provide such notice to the Director.

(e) The award shall be unenforceable until the notice required by subsection (d) is received by the Director.

However, anyone inspecting the award will notice substantial redacted portions (including portions relating directly to the validity and infringement issues).  I would suggest that submission does not fully comply with the requirements of Section 294.

Supreme Court Update: Are Secondary Indicia of Invention Relevant to Eligibility?

by Dennis Crouch

The Supreme Court is on recess until Feb 17.

I don’t know if my end-of-April prediction will hold true, but I do expect Neil Gorsuch to become a Justice on the United States Supreme Court.  As a 10th Circuit Judge, Gorsuch never decided a patent case, but does have a handful of interesting IP cases.

There are a few petitions filed that we have not discussed here: 

 In its newest petition, DataTreasury takes 101 for a new spin by taking the 101/103 analysis to its next logical level.  If we are going to include a 103 analysis as part of the eligibility doctrine then lets go whole hog.  Thus, DataTreasury asks: whether a court must consider secondary indicia of invention as evidence in its eligibility analysis? In the case, the Federal Circuit had affirmed the PTAB judgment without opinion under R.36. A second eligibility petition is found in TDE Petroleum Data Solutions, Inc. v. AKM Enterprise, Inc., dba Moblize, Inc. TDE asks the court to “please reconcile Diehr and Alice.” (I’m not literally quoting here).  The patent at issue (No. 6,892,812) claims a four-step process of “determining the state of a well operation.” (a) store several potential “states”; (b) receive well operation data from a plurality of systems; (c) determine that the data is valid by comparing it to a threshold limit; and (d) set the state based upon the valid data.

In Wi-LAN v. Apple, the patentee revives both Cuozzo and Markman claim construction arguments – this time focusing on “whether claim terms used to define the metes and bounds of an invention are generally given their “plain and ordinary meaning,” or are redefined (limited) to match the scope of the exemplary embodiments provided in the specification.”

duPont v. Macdermid asks whether summary judgment of obviousness is proper because of the factual disputes at issue.  Similarly, in Enplas v. Seoul Semiconductor, the petitioner argues that a finding of anticipation by the PTAB must be supported by findings each and every element of the subject patent claim is disclosed in the prior art.  In Enplas, the Federal Circuit affirmed the PTAB on a R.36 Judgment Without Appeal — it difficult for the petitioner to point to the particular deficiencies.


=== THE LIST===

1. 2016-2016 Decisions:

  • Design Patent Damages: Samsung Electronics Co. v. Apple Inc., No 15-777 (Total profits may be based upon either the entire product sold to consumers or a component);  GVR order in parallel case Systems, Inc. v. Nordock, Inc., No. 15-978.  These cases are now back before the Federal Circuit for the job of explaining when a component

2. Petitions Granted:

3. Petitions with Invited Views of SG (CVSG): 

4. Petitions for Writ of Certiorari Pending:

  • Claim Construction: Wi-LAN USA, Inc., et al. v. Apple Inc., No. 16-913 (“plain and ordinary meaning”)
  • Is it a Patent Case?: Boston Scientific Corporation, et al. v. Mirowski Family Ventures, LLC, No. 16-470 (how closely must a state court “hew” federal court patent law precedents?) (Appeal from MD State Court)
  • Anticipation/Obviousness: Google Inc., et al. v. Arendi S A.R.L., et al., No. 16-626 (can “common sense” invalidate a patent claim that includes novel elements?) (Supreme Court has requested a brief in response)
  • Anticipation/Obviousness: Enplas Corporation v. Seoul Semiconductor Co., Ltd., et al., No. 16-867 (“Whether a finding of anticipation under 35 U.S.C. § 102 must be supported by findings that each and every element of the subject patent claim is disclosed in the prior art?”)
  • Anticipation/Obviousness: E.I. du Pont de Nemours and Company v. MacDermid Printing Solutions, L.L.C., No. 16-905 (summary judgment of obviousness proper)
  • Jury Trial: Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, et al., No. 16-712 (“Whether inter partes review … violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.”) [oilstatespetition]
  • Jury Trial: Nanovapor Fuels Group, Inc., et al. v. Vapor Point, LLC, et al., No. 16-892 (Can a party forfeit a properly demanded trial by jury without an explicit, clear, and unequivocal waiver?)
  • Is it a Patent Case?: Big Baboon, Inc. v. Michelle K. Lee, No. 16-496 (Appeal of APA seeking overturning of evidentiary admission findings during reexamination – heard by Federal Circuit or Regional Circuit?)
  • LachesMedinol Ltd. v. Cordis Corporation, et al., No. 15-998 (follow-on to SCA); Endotach LLC v. Cook Medical LLC, No. 16-127 (SCA Redux); Romag Fasteners, Inc. v. Fossil, Inc., et al, No. 16-202 (SCA Redux plus TM issue)
  • Eligibility: TDE Petroleum Data Solutions, Inc. v. AKM Enterprise, Inc., dba Moblize, Inc., No. 16-890 (Please reconcile Diehr and Alice)
  • Eligibility: DataTreasury Corporation v. Fidelity National Information Services, Inc., No. 16-883 (secondary indicia as part of eligibility analysis).
  • Eligibility: IPLearn-Focus, LLC v. Microsoft Corp., No. 16-859 (evidence necessary for finding an abstract idea)

5. Petitions for Writ of Certiorari Denied or Dismissed:


Apple Samsung: Federal Circuit Remands Design Patent Damages Decision to District Court

iphonedesignpatentimageBy Dennis Crouch

Apple v. Samsung (Fed. Cir. 2017)

In a non-precedential decision, the Federal Circuit has remanded this design patent damages dispute back to the district court reconsideration.  The basic question is whether the patented “article of manufacture” (which serves as the basis for profit disgorgment) should be the entire article sold to consumers or some component of that whole.  A patentee would obviously prefer the whole-article basis because it would result in a greater total-profit award. In Samsung Elecs. Co. v. Apple Inc., 137 S. Ct. 429 (2016), the Supreme Court held that the statute is broad enough to encompass either the entire-article or simply a component.  However, the Court refused to provide any guidance as to how to determine the appropriate basis in any particular case (including this case involving Apple’s iPhone design patents).

On remand here, the Federal Circuit has also refused to particularly decide the case but instead has remanded to the District Court for her analysis.  “[W]e remand this case to the district court for further proceedings, which may or may not include a new damages trial.”

The court did provide some commentary:

The Supreme Court clarified that a damages award under § 289 involves two steps: (1) “identify the ‘article of manufacture’ to which the infringed design has been applied;” and (2) “calculate the infringer’s total profit made on that article of manufacture.”

The parties here dispute whether the jury instructions were appropriate based upon this clarification of the law.   Apparently, Judge Koh read the statute to the jury, and did not particularly indicate whether the “article of manufacture” was the phone as a whole or some component thereof.  So, while the instructions are not wrong, they could be more detailed.

On remand, the District Court will need to review the trial record and determine whether a new damages trial is necessary based upon more detailed jury instructions.

= = = = =

I like what the court did here.  When the Federal Circuit does decide this issue, its precedential approach is likely to stick for many years to come.  It makes sense then for the court to seek the perspective of at least one other judge before jumping into the foray.  Here, there is no question that the district court more fully understands the case and the particulars of the trial and so it is also right to remand for consideration of how the Supreme Court’s decision impacts what has already been decided. We can also recognize that the parties are fighting over past damages and both have sufficient cash-on-hand so that a delay in judgment does not create irreparable harm.

= = = = =

In a Footnote, the court looked to foreclose a separate argument on remand. The court writes:

Samsung also argued that § 289 “contains a causation requirement, which limits a § 289 damages award to the total profit the infringer made because of the infringement.” We rejected that argument, and Samsung abandoned this theory during oral argument to the Supreme Court.

Thus, although causation may still be an issue to be debated – it appears out for this case.

N.D. Cal New Disclosure Rules

disclosureBy Dennis Crouch

The N.D. California Court has amended its local rules used for patent infringement cases. [patent_local_rules_1-2017]. One of the most interesting change is the required “damages contentions.”

Initial Case Management: The parties shall provide the court with a non-binding, good-faith estimate of the damages range expected for the case along with an explanation for the estimates. If either party is unable to provide such information, that party shall explain why it cannot and what specific information is needed before it can do so. Such party shall also state the time by which it should be in a position to provide that estimate and explanation. . . .

Damages Contentions Within 50-days of Invalidity Contentions: Identify each … category[] of damages it is seeking for the asserted infringement, as well as its theories of recovery, factual support for those theories, and computations of damages within each category, including: 1. lost profits; 2. price erosion; 3. convoyed or collateral sales; 4. reasonable royalty; and 5. any other form of damages. (b) To the extent a party contends it is unable to provide a fulsome response to the disclosures required by this rule, it shall identify the information it requires.

Responsive Damages Contentions within 30 days: [E]ach party denying infringement shall identify specifically how and why it disagrees with those contentions. This should include the party’s affirmative position on each issue. To the extent a party contends it is unable to provide a fulsome response to the disclosures required by this rule, it shall identify the information it requires.

Early damages contentions has been pushed by former Chief Judge Rader for several years, with the intent of ensuring proportionality in litigation.  The basic idea is that cases worth lots of money justify more ‘lawyering’ and thus may be tied to reasonable attorney fees collected in exceptional cases.  The German approach is something like this.  Of course US legal tradition does not require defendants (or plaintiffs) to settle cases and traditionally does not penalize them even when the lawyer fees exceed any expected payout.

In general, I would expect that patentees will continue to take steps to avoid N.D. California for filing its patent cases.  However, that option will be severely limited if the Supreme Court tightens patent venue in the pending TC Heartland case.

PTAB initiation of PGR Does not Negate Preliminary Injunction

tinnuspatentby Dennis Crouch

Tinnus Enterprises v. Telebrands (Fed. Cir. 2017) [tinnustelebrands]

In an opinion by Judge Stoll, the Federal Circuit has affirmed an E.D.Texas preliminary injunction barring the accused infringer from selling its “Balloon Bonanza” product “or any colorable imitation thereof.”

I previously wrote about the case that involves Telebrands’ patented balloon-filling-toy. U.S. Patent No. 9,051,066.  The case is one of the first lawsuits involving a post-AIA patent.

Preliminary Injunctive Relief: Even before eBay, courts applied a four-factor test to determine whether to award a preliminary injunction to stop ongoing infringement pending a final judgment in the case. (eBay changed the rule for permanent injunctive relief.).

A decision to grant or deny a preliminary injunction is within the sound discretion of the district court, based upon its assessment of four factors: (1) the likelihood of the patentee’s success on the merits; (2) irreparable harm if the injunction is not granted; (3) the balance of hardships between the parties; and (4) the public interest.

The factors are slightly different than those considered for permanent relief in eBay.  Most importantly, at the pre-trial stage, the patentee has not established that it will actually win the case and be eligible for any remedy at all. Thus, the Preliminary Injunction factors include consideration of who is likely to win.  The Prelminary Injunction factors also eliminate the eBay factor that “remedies available at law are inadequate to compensate for the injury” by rolling that factor into the irreparable harm consideration.  A fifth element that is not usually stated in the test is that the patentee must also be willing and able to post a bond to the court that will compensate the enjoined party if it turns out that the injunction was improper. Rule 65(c) requires a bond “in an amount that the court considers proper to pay the costs and damages sustained by any party found to have been wrongfully enjoined or restrained.” Fed. R. Civ. P. 65(c). Two important aspects on appeal: (1) A district court’s PI order (either grant or denial) is immediately appealable even though it is a non-final interloctutory order. 28 U.S. Code § 1292. (2) Because district courts are given discretion in awarding preliminary injunctive relief, those judgments are given deference on appeal.

PTAB Interplay: As with so many US patent lawsuits, the case involves a parallel AIA-trial. Since the patent at issue here is a post-AIA patent, the challenger was able to file for post-grant-review (PGR).

The timeline is relevant:

  • Patentee files the lawsuit and requests a preliminary injunction.
  • District court awards PI – after considering but rejecting invalidity challenges by defendant.
  • Defendant files PGR petition – making the same invalidity arguments (indefinite and obvious).
  • USPTO initiates PGR – finding claims likely invalid as obvious and indefinite.
  • Defendant appeals court PI.

As noted above, a key factor for awarding preliminary relief is the likelihood that the patentee will ultimately win the case on the merits.  Although a patent is presumed valid, a challenger can overcome this hurdle by showing that the patent is “vulnerable” to a specific validity challenge.  The court has also termed this as finding a “substantial question concerning the validity of the patent.”  A seemingly reasonable approach here would be to say – “If the PTO concludes that claims are likely invalid, then those claims are probably vulnerable to being found invalid.”  Here, the court does not follow that approach and – in fact – does not even mention the PTAB initiation decision in its discussion of the aforementioned vulnerability.  (The court does state that the PTAB has taken action, but does not appear to draw any conclusions for this case from that parallel proceeding).  Implicit holding here is that the PTAB initiation of a PGR Does not negate a preliminary injunction.

Rather, the appellate panel walked through the district court decision and found that (1) someone of skill in the art would likely understand the term “substantially filled” and thus it is not indefinite; and (2) the district court did not err in holding that prior art associated with filling an endoscopic balloon was not analogous or pertinent to the problem of filling toy water balloons.

Preliminary Injunction Affirmed.

= = = =

Motivated to Consider vs Motivated to Combine: The Federal Circuit is still working through how to deal with the analogous arts test post KSR.  Here, the court ultimately found there was no ‘motivation to combine’ the prior art since one of the references was not ‘analogous art.’  In at least pre-KSR tradition, these were separate inquiries within the obviousness process outlined in Graham v. John Deere.  The analogous arts test has long been thought of as part of the initial factual Graham inquiry – identify the scope and content of the prior art.  Under the doctrine as explained in Clay, the court limits the scope of prior art only to references that a worker may have been motivated to consider.  These are generally thought of as references in the same field of endeavor or addressing similar problems as those faced by the inventor.  Of course, just because two prior art references are within the same field does not mean that the worker would have been motivated to combine the elements of references in the way claimed by the inventor.  Thus, traditionally, the motivation to consider a reference is a unique and different inquiry than that of the motivation to combine the elements of multiple references.  Here, the court appears to mix them together in a way that adds to confusion in the inquiry rather than offering clarity.

Now, maybe it makes sense to throw-out the old Graham v. John Deere structured approach, but that should be an explicit process rather than a set of (perhaps-unintentional) undermining decisions.

Supreme Court 2017 – Patent Preview

by Dennis Crouch

A new Supreme Court justice will likely be in place by the end of April, although the Trump edition is unlikely to substantially shake-up patent law doctrine in the short term.

The Supreme Court has decided one patent case this term. Samsung (design patent damages).  Five more cases have been granted certiorari and are scheduled to be decided by mid June 2017. These include SCA Hygiene (whether laches applies in patent cases); Life Tech (infringement under 35 U.S.C. § 271(f)(1) for supplying single component); Impression Products (using patents as a personal property servitude); Sandoz (BPCIA patent dance); and last-but-not-least TC Heartland (Does the general definition of “residence” found in 28 U.S.C. 1391(c) apply to the patent venue statute 1400(b)).

Big news is that the Supreme Court granted writs of certiorari in the BPCIA dispute between Sandoz and Amgen.   The BPCIA can be thought of as the ‘Hatch Waxman of biologics’ – enacted as part of ObamaCare.   The provision offers automatic market exclusivity for twelve years for producers of pioneer biologics.   Those years of exclusivity enforced by the FDA – who will not approve a competitor’s expedited biosimilar  drug application during the exclusivity period.   The statute then provides for a process of exchanging patent and manufacturing information between a potential biosimilar producer and the pioneer – known as the patent dance.  The case here is the Court’s first chance to interpret the provisions of the law – the specific issue involves whether the pioneer (here Amgen) is required to ‘dance.’ [Andrew Williams has more @patentdocs]

A new eligibility petition by Matthew Powers in IPLearn-Focus v. Microsoft raises eligibility in a procedural form – Can a court properly find an abstract idea based only upon (1) the patent document and (2) attorney argument? (What if the only evidence presented supports eligibility?).  After reading claim 1 and 24 (24 is at issue) of U.S. Patent No. 8,538,320, you may see why the lower court bounced this. Federal Circuit affirmed the district court’s ruling without opinion under Federal Circuit Rule 36 and then denied IPLF’s petition for rehearing (again without opinion).

1. A computing system comprising:

a display;

an imaging sensor to sense a first feature of a user regarding a first volitional behavior of the user to produce a first set of measurements, the imaging sensor being detached from the first feature to sense the first feature, the first feature relating to the head of the user, and the first set of measurements including an image of the first feature, wherein the system further to sense a second feature of the user regarding a second volitional behavior of the user to produce a second set of measurements, the second feature not relating to the head of the user; and

a processor coupled to the imaging sensor and the display, the processor to:

analyze at least the first set and the second set of measurements; and determine whether to change what is to be presented by the display in view of the analysis.

24. A computing system as recited in claim 1, wherein the system capable of providing an indication regarding whether the user is paying attention to content presented by the display.

=== THE LIST===

1. 2016-2016 Decisions:

  • Design Patent Damages: Samsung Electronics Co. v. Apple Inc., No 15-777 (Total profits may be based upon either the entire product sold to consumers or a component);  GVR order in parallel case Systems, Inc. v. Nordock, Inc., No. 15-978.  These cases are now back before the Federal Circuit for the job of explaining when a component

2. Petitions Granted:

3. Petitions with Invited Views of SG (CVSG): 

4. Petitions for Writ of Certiorari Pending:

  • Is it a Patent Case?: Boston Scientific Corporation, et al. v. Mirowski Family Ventures, LLC, No. 16-470 (how closely must a state court “hew” federal court patent law precedents?) (Appeal from MD State Court)
  • Anticipation/Obviousness: Google Inc., et al. v. Arendi S A.R.L., et al., No. 16-626 (can “common sense” invalidate a patent claim that includes novel elements?) (Supreme Court has requested a brief in response)
  • Civil Procedure – Final Judgment: Johnson & Johnson Vision Care, Inc. v. Rembrandt Vision Technologies, L.P., No. 16-489 (Reopening final decision under R.60).
  • Anticipation/Obviousness: Enplas Corporation v. Seoul Semiconductor Co., Ltd., et al., No. 16-867 (“Whether a finding of anticipation under 35 U.S.C. § 102 must be supported by findings that each and every element of the subject patent claim is disclosed in the prior art?”)
  • Post Grant Admin: Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, et al., No. 16-712 (“Whether inter partes review … violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.”) [oilstatespetition]
  • Eligibility: IPLearn-Focus, LLC v. Microsoft Corp., No. 16-859 (evidence necessary for finding an abstract idea)
  • Post Grant Admin: SightSound Technologies, LLC v. Apple Inc., No. 16-483 (Can the Federal Circuit review USPTO decision to initiate an IPR on a ground never asserted by any party)
  • Is it a Patent Case?: Big Baboon, Inc. v. Michelle K. Lee, No. 16-496 (Appeal of APA seeking overturning of evidentiary admission findings during reexamination – heard by Federal Circuit or Regional Circuit?)
  • LachesMedinol Ltd. v. Cordis Corporation, et al., No. 15-998 (follow-on to SCA); Endotach LLC v. Cook Medical LLC, No. 16-127 (SCA Redux); Romag Fasteners, Inc. v. Fossil, Inc., et al, No. 16-202 (SCA Redux plus TM issue)
  • Eligibility and CBM: DataTreasury Corporation v. Fidelity National Information Services, Inc., No. 16-883 (I have not seen the petition yet, but underlying case challenged whether (1) case was properly classified as CBM and (2) whether PTAB properly ruled claims ineligible as abstract ideas) (Patent Nos. 5,910,988 and 6,032,137).

5. Petitions for Writ of Certiorari Denied or Dismissed:

Has the Academy Led Patent Law Astray?

Prof Jonathan Barnett (USC) has released his new article arguing that we’ve gone too-far — that those arguing for dramatic changes to the patent system did so with “little to no supporting evidence.” [READ IT HERE]. Barnett argues that

Depropertization of the patent system—yields three potential efficiency losses. First, depropertization impedes efficient resource allocation by shifting the pricing of technology assets from the relatively informed marketplace to relatively uninformed judges and regulators. Second, depropertization distorts markets’ organizational choices by inducing entities to undertake innovation and commercialization through vertically integrated structures, rather than contractual relationships now clouded by the prospect of judicial re-negotiation. Third, depropertization may facilitate oligopsonistic efforts to depress royalties on patent-protected inputs, resulting in wealth transfers to downstream entities and discouraging innovation by upstream R&D suppliers.

In the article, Barnett primarily focuses on the idea of a patent thicket and whether these patent thickets have inhibited downstream innovation.  Barnett concludes: “Without a secure expectation of injunctive relief and compensatory damages, false prophecies of too many patents may result in too little innovation.”  Of course this conclusion also rests upon weak empirical ground.


Guest Post: TC Heartland and Statutory Interpretation

By: Michael Risch, Professor of Law, Villanova University Charles Widger School of Law

After the certiorari grant in TC Heartland, Dennis solicited a blog post from anyone who thought the case was not a slam dunk. Always the contrarian, I took him up on the offer. In a prior blog post at my own blog, Written Description, I detail some of the history of the statute and highlight why I think that Fourco does not necessarily answer the question. Colleen Chien and I flesh out the history and interpretation a bit more in our article, which we’ve blogged about here in the past.

I should note that the outset that I favor TC Heartland’s position from a policy point of view. I’ve long said in a variety of venues (including comment threads on this very blog) that there are significant problems with any system in which so much rides on where the case is filed. And I think that’s true whether you think they are doing a great or terrible job in the Eastern District of Texas.

Now, on to the interpretive issues. In general, I favor the application of longstanding original norms of statutory interpretation unless there’s good reason to depart from them (see, e.g., my new paper on reasonable royalties). I think this is doubly true where no one ever challenged the original interpretation (see, e.g. the ridiculous claims that common law copyright grants a performance right to sound recordings, despite the fact that no one ever thought so in the history of common law copyright). But in this case, I don’t think one can simply rely on the fact that no one challenged VE Holdings for 25 years. After all, the Supreme Court just overturned our understanding of design patent damages despite a tacit understanding that was more than 100 years old. As I noted here, this bothered me a bit given my general views, but I also think it was the correct statutory interpretation.

But, as I noted in my prior blog post, I don’t think one can just say “Fourco controls.” As I noted there: “Stonite and Fourco were statutory interpretation problems…. [T]his is a statutory interpretation problem. But the statute in Fourco is different from the statute today and has been amended twice since. We cannot rely on a supposed ‘rule’ about a statute that no longer exists.”

Instead, we have to return to first principles. In Stonite, the court clearly held that the patent venue statute was a special statute, to be specially applied differently than the general venue statute.  After Stonite, the general venue statute was amended. But let’s look at the statutes of the time. Right out of Fourco:

Section 1400 is titled “Patents and copyrights,” and subsection (b) reads:

“(b) Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.”

Section 1391 is titled “Venue generally,” and subsection (c) reads:

“(c) A corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes.”

The court ruled that not enough changed since Stonite: we still had two separate venue tracks, and the patent statute was separate. The question now: is there a way for Congress to have changed this? could it have done so unintentionally? Let’s look at the 1988 change to 1391(c):

“For purposes of venue under this chapter, a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced.”

There is a key change here: 1391(c) no longer talks about a “separate” track where corporations can be sued “for venue purposes.” Instead, it says that “for purposes of venue under this chapter…” the definition of resides has now been set (emphasis added). The question is whether the Fourco precedent means that Congress had to do more than this to change the meaning of 1400(b) (which is in the same chapter). In VE Holdings, the Federal Circuit said no, it didn’t – that the plain language modified 1400, and, essentially, that Congress had said there were no more tracks here.

And that, I think, is the core question here. This is not a Supreme Court policy. This is the Court interpreting the statute. What did Congress do? In Stonite and Fourco, the Court said that Congress intended two separate tracks. The Federal Circuit says that in 1988, Congress merged those tracks by changing the definition of “venue” “under this chapter.”

The only other information we have is that in 2011, more than 20 years after VE Holdings, Congress expanded 1391 again. Section 1391(a) says the section applies to all civil actions “except as otherwise provided by law” (and as we detail in our article, the legislative history is clear that this referred to a list of statutes compiled by the ALI, and 1400 is not among them.) Further, 1391(c) expanded from “under this chapter” to “all venue purposes.” In other words, knowing that the Federal Circuit had interpreted 1391(c) and 1400 to be in a single track, Congress further expanded 1391 even more broadly and did nothing to clarify that no, really, “resides” in 1400(b) was really intended to continue to have the narrow definition. We know from many other contexts, in patent law and otherwise, that Congress is fully capable of correcting erroneous court interpretations, and the agglomeration of cases in Texas was known in 2011. Indeed, the AIA was passed in close proximity, and it included special provisions to deal with filings in Texas, but never once attempted to clarify that VE Holdings interpretation was wrong. For Congress to have expanded the venue statute and pass the AIA without addressing this point is particularly salient.

I, frankly, have no idea how this statutory interpretation issue will or even should come out. I don’t think this is a statutory slam dunk either way. TC Heartland is represented by outstanding lawyers who make outstanding arguments to the contrary. And the Court even granting cert. says something. You could dismiss all I’ve written with a wave of the hand: Fourco stands for the proposition that 1400(b) is separate and the current 1391(c) is no different in structure than the 1391(c) that faced the court then. I am troubled by this argument, but I can see how others might reasonably embrace it.

Default Judgment for Major Discovery Failures

TileTechPatentby Dennis Crouch

United Construction was won on default judgment and was awarded a permanent injunction to bar Tile Tech from ongoing infringement of its U.S. Patent No. 8,302,356.  Although Tile Tech had participated in the case, it had missed many discovery deadlines and had produced only two document – both of which were nonresponsive.  The district court issued an order to comply with a warning that failure to comply would result in default judgment.  Tile Tech did not respond to the order and the court then entered default judgment. (Tile Tech had also destroyed evidence …)

The patent at issue is covers a support pedestal used to secure tiles elevated above a flooring base.  Some folks use these to support a roof-top deck, for instance. (Tile Tech’s Website showing use).

On appeal here the Federal Circuit has affirmed – finding that the district court did not abuse its discretion in issuing the default judgment (following 9th Circuit law)

Here, the District Court gave ample warning to Tile Tech in its Order to Compel that it would enter default judgment if discovery responses were not forthcoming. . . . The District Court’s opinion demonstrates its thorough consideration of the Malone factors leading to the ultimate decision not to impose lesser sanctions in this case, a decision which we find was not an abuse of discretion. As the District Court explained, “[w]here a party so damages the integrity of the discovery process that there can never be assurance of proceeding on the true facts, a case dispositive [remedy] may be appropriate.”

Quoting Conn. Gen. Life Ins. Co. v. New Images of Beverly Hills, 482 F.3d 1091, 1097 (9th Cir. 2007).

The Federal Circuit’s one interpretative change involved a portion of the injunction that barred Tile Tech from using using images of the patentee’s products in “any marketing material.”  This portion of the injunction was not based upon the infringement claim but instead upon the parallel unfair competition claim.  Still, Tile Tech argued that the injunction was over-broad because it would bar legal activities such as competitive advertising where there is no likelihood of confusion. On appeal, the Federal Circuit agreed with Tile Tech that such a prohibition would be over broad.  However, instead of amending or vacating the injunction, the Federal Circuit determined that the injunction should simply be narrowly interpreted: “To the extent that in the future Tile Tech’s advertising clearly distinguishes its product from that of United’s in a comparative advertisement, in a way that is not ‘an act of unfair competition,’ we read the injunction to not prohibit such uses.”  With that limitation, the injunction fit within the proper bounds.


Returning to our Roots with Reasonable Royalties

A new draft paper by Professor Michael Risch (Un)Reasonable Royalties positions itself as a major reconsideration of the way that we calculate damages in patent cases.  This revolution has been brewing in academic circles, but I expect the spillovers into case law will be coming soon.  Over the past few years the Federal Circuit has pushed for more explicit discussion and explanation of damages. (See Lucent and Uniloc).  However, Risch argues that the result has been a “piling” of “rigid rules” rather than economic rationality.  (This rule versus rationality debate seems to keep coming up…)

Risch favors the economic and practical justification for the reasonable royalty floor for patent damages, but argues that courts have departed widely from the doctrine’s century-old origin — in ways that have “led to both over- and under-compensation.”  Big targets for Risch are the hypothetical negotiation and the Georgia-Pacific factors. He writes:

The hypothetical negotiation is a staple of reasonable royalty analysis by parties and courts, but it is not—as currently applied, at least—consistent with the traditional reasonable royalty framework. . . .

The [traditional] willing buyer/seller analysis might sound the same, but it is not. The negotiation includes many extraneous elements that have no place in a damages calculation, like bargaining power and a guarantee of profit. Furthermore, a focus on negotiation implies that the value of a patent must be fixed before the infringement, and successful patents should go uncompensated if the success was a surprise. Neither of these was contemplated in early cases. . . .

[R]easonable royalties are supposed to be compensatory in nature. The question isn’t what the parties would have negotiated, it is what the appropriate amount of compensation should be. . . . And that is hard enough; trying to also speculate [particulars such as] whether the parties would have negotiated a lump sum or a running royalty adds a layer of complexity that is unnecessary.

I am drawn to Risch’s approach of discarding rules for the sake of rules – especially when the rules are piled in ways that are complex and contradictory.  I like to keep in mind that a jury of non-experts will actually be deciding the damage values and so the approach also needs to be simple and logical enough for that body to rule upon.  Although my justification is that the law needs to be simplified for the jury –simple and logical rules benefit us in myriad ways.

For litigators – Professor Risch also does a nice job of explaining contradictions between current practice and older case-law that may well be ripe for court challenge.

Read the article: (Un)Reasonable Royalties